Main Street feeling price pinch

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FEARS MOUNTING PRICE SPIKES WILL SLAM AMERICAN JOBS

Gary B. Smith: I went back through the history tracking the unemployment rate versus the Consumer Price Index, which measures inflation. I could find no correlation. In fact, in a couple instances in the early 1950s and mid 1970s we had very high inflation and the unemployment rate was very low. I'm not saying that's always going to happen and if inflation happens we may see a dip in unemployment, but I don't think they are correlated. I don't think you can make a blanket statement that is what we'll see this time.

Tobin Smith: In the part of the cycle we're in right now, we've seen one trillion dollars of investment in improving productivity. That's been done. Now, a company can't buy more productivity here. Since 70 percent of costs are labor that is where you can't buy a machine. Now I have to lay off laborers. Today the buying and the selling is all computerized.

Jonas Max Ferris: Until labor costs start to rise you're not going to have a major problem with firing people. In fact, labor costs are rising lower rates than inflation-not as much as energy and not as much as food. There is more inflation than labor cost inflation. That's ultimately what drives your labor costs. In addition to that, a lot of companies didn't add a lot. That's why we have a high unemployment rate. They just did overtime. So, it's not like they added all these people and we have a 5 percent unemployment rate today and they're going to have to let them go because the economy gets a little hiccup. There are a lot of people working overtime who they can ease back on without firing them. So, we're not going to see unemployment rise just because consumer prices may rise a little bit. Watch labor costs.

Todd Schoenberger: This is a simple lesson in economics 101-when you're spending more money for life's necessities such as food you are going to have less money for other items. Therefore, corporate profits will take a hit. That leaves corporations with two options. The first is to pass the rising costs onto the consumers, which we're already seeing. Or you simply start laying people off, so we have to be prepared.

Mike Norman: While consumers are paying higher prices someone is earning that additional income. It all stays within the economy. It doesn't necessarily and automatically equate to layoffs. If you look back over periods of time when we had rising prices-most recently the 2007 to 2008 period-we had an increase in payrolls and a decline in unemployment. So, until the point when maybe it results in a recession that would be problematic. But, right now it all stays within the economy.

WHITE HOUSE CALLS TO DOUBLE DOWN ON GREEN AGENDA AS GAS PRICES SOAR

Gary B. Smith: If Obama's assignment was to help increase gas prices I would give him an A+. He must have been sitting in the Oval Office saying, let's see, how can I raise gas prices? I can either raise taxes or threaten to raise taxes on the oil and gas industry. Thereby making it less attractive to be in that industry. But, if you decide to stay in that industry, I'll be the most restrictive president ever on allowing permits, offshore drilling and ways to access your resources. Finally, I will divert all the money from taxes into industries that have yet to turn a dollar of profit like wind farms and algae. This president has definitely gotten an A+ in the ability to raise gas prices.

Tobin Smith: If the problem was speculation-that there are six times more oil contracts than there is oil out there-why don't we have twenty times more bond contracts out there than we have ten-year bonds and interest rates have gone down? If that was right we have fourteen more bond contracts out for natural gas and natural gas prices are going down. You can't blame the speculators. What you can blame, however, is the emotion of buyers at the margin right now.

Jonas Max Ferris: If the government wants to raise money in alternative energy it's not economically a good idea, but it could lower the price. A lot of what the government does, in theory, lowers demand. When they raise cap standards, when they say cars have to get 50 miles per gallon. In theory that will lower the demand for fuel and lower the price. It's not a good way to run the economy, but it will do that. If they sink a lot of money into ethanol or algae, it may waste taxpayer money but if it comes into the mix of the fuel it will artificially lower the price at the pump.

Todd Schoenberger: This is about supply and demand economics. Human beings around the globe consume 85 million barrels of oil each day. We only pump out 87 million barrels of oil out of the earth each day. You have globalization that's taking place. Not an entire barrel of crude is used for petroleum-based products. 10 percent goes to plastics. When you have more undeveloped countries like India and China who are now economic superpowers they consume more non-petroleum based products that need oil. It's simple supply and demand economics.

Mike Norman: There's not a lot of correlation with what we're seeing in alternative energy now in terms of ethanol, electric vehicles and all these other things that are actually causing gasoline consumption to come down and new production of oil domestically. The price continues to go up. That is outside any of the normal rules of economics. In my opinion, there's only one reason for it and that is speculation rearing its ugly head just as it did in 2008. I don't even know why we have to have this discussion as to whether or not it's contributing. It's absolutely contributing because every economic factor tells you that gas should be coming down, not up.

STUDY: OVERHAULING CORPORATE TAXES MAY SEND WAGES LOWER

Gary B. Smith: This is not a tax decrease. Overall, it raises corporate taxes. He talks about eliminating loopholes. There are so many more new loopholes on this, not the least of which is favoring some industries at the expense of others. This is hair brained and dumb just like all his other economic ideas.

Tobin Smith: I've never seen a tax cut in sheep's clothing here. The idea that we're "lowering" these taxes after we blow out all the other pieces of the tax code means that most corporations would pay higher tax rates than they did last year. Now we know from all economic statistics, when you raise those rates by definition they are going to cut costs, which means labor and they are going to cut jobs. We've seen that time and time again and there's no reason we won't see it now.

Jonas Max Ferris: The overall idea about lowering the corporate tax rate, which we need to do to be competitive especially because Japan's lowering it. Yes there are some companies that will get breaks in the tax code that will see their tax rate increase. Too bad for them. Yes, they might fire some people because of it, but everyone else is going to see a lower rate with less deductions. That is a good thing.

Todd Schoenberger: The problem with this plan is the idea that he's going to end up taxing foreign revenues. So you're going to hit our multinationals, companies like McDonalds, Coco-Cola. That additional tax will prevent hiring down the road.

Mike Norman: Tax revenue collected by the government, as a percentage of total revenue is at the lowest level in history and it hasn't done squat for creating jobs. Corporations are simply keeping those profits. We hear all these people complaining and we find out that they haven't been paying any taxes to begin with.